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08 June 2016

The Fan Klub, Churchill, and taxes - update

As the provincial Conservatives and New Democrats filibuster the levy bill in the House of Assembly that Winston Churchill quote about taxes popped up again.

The ones pushing the quote hard on Twitter seem to be mostly charter members of the Danny Williams Fan Klub. That's not surprising given that responsibility for the financial mess, the chronic, deliberate overspending and the morass at Muskrat rest solely on his shoulders.

As it turns out, your humble e-scribbler was wrong about the Churchill quote. He did say something like it in a free trade speech in 1904. [h/t to @cmhealy ] Richard Langworth, a Churchill historian included the quote in one of his collections of Churchill speeches and, ironically enough,h ad the free trade quote when the Churchill archive online did not have it cited.

What's fascinating about Langworth's account is that even the original wording didn't survive very long It turned up in a collection of edited speeches a couple of years later but in the second version, the line about taxes and a bucket has been changed substantially in meaning and looks like it has been grafted onto another thought.

That's basically what has been happening in the recent incarnations of the tax and bucket comment. It has been twisted out of all recognition to where it started as part of a speech against protectionist tariffs. Your humble e-scribbler might have been off on the quote but the context was bang on.

As the post a couple of weeks ago noted, Churchill didn't share the American Republican view of taxes as an immoral imposition on people. Those are the folks who trumpet the reworked Churchill quote and they are philosophical cousins of the Williams Conservatives in this province. Churchill had no problem imposing taxes for a greater public good. He just specifically opposed barriers to free trade.

Here's the original thought:

To think you can make a man richer by putting on
a tax is like a man thinking that he can stand in a bucket and lift himself up
by the handle.

Here's the lead-in Churchill used: "It is the theory of the Protectionist that imports are an
evil. He thinks that if you shut out the foreign imported manufactured goods
you will make these goods yourselves, in addition to the goods which you make
now, including those goods which we make to exchange for the foreign goods that
come in. If a man can believe that he can believe anything. [Laughter.] We
Free-traders say it is not true. To think you can make a man richer by putting
on a tax is like a man thinking that he can stand in a bucket and lift himself
up by the handle. [Laughter and cheers.]"

It has nothing at all to do with trying to cope with sort of financial mess the Williams Conservatives left in 2015. The tax increases in this budget aren't about enriching anyone. They are a puny effort to stave off collective bankruptcy. The current budget includes about $500 million in tax increases. The total borrowing - allowing for those tax increases - is now $3.4 billion. That's almost seven times as much.

The amount is staggering.

It is so large that people quite obviously cannot get their heads around it. You can tell they have no idea how big the problem is when they say things like the tax increases are "too much, too soon." We still have to borrow seven times that much to balance the books this year. We have to add seven times that much in new debt to be paid off. How much will we have to borrow next year and the one after that?

How much more slowly do these people think we should go until they can feel comfortable? One suspects that they are so clued out or so utterly self-absorbed that no increases ever is the only thing that would make them happy. No matter. Their comments are absurd. They are ludicrous. They are laughable.

But let us try and get our heads around it.

When Roger Grimes was within inches of signing a deal to build Gull Island and Muskrat Falls, $3.4 billion was more than the estimated cost of the whole project. Plus, Quebec agreed to buy the power at a guaranteed floor price. We actually could have paid the whole thing off - in cash - by 2007, given the cash windfall that came from ballooning oil prices.

We would be making money on it today. By contrast, Muskrat Falls will come at more than triple the cost and there are no sales guaranteed from outside the province. The people of Newfoundland and Labrador will pay for the whole thing and send the profit and the benefit outside the province. Muskrat Falls is more public debt on top of the record level of public debt the provincial Conservatives left.

It's a classic American Republican kind of philosophy: massive public spending, cuts to taxes, massive subsidies to private business, and fanatical opposition to any effort to bring public debt under control. And that's the Conservative legacy, including the Trump twist of xenophobia bordering on racism: Massive public debt. Opposition to free trade. And the giveaway of our resources to the benefit of people outside Newfoundland and Labrador.